I just don't understand at all why Tether is a thing, except for the obvious aid to black market transactions. Because it's centrally issued and "backed" it isn't trustless. Because it isn't trustless there's a risk of any number of issues that don't arise if I just leave my dollars in a Wells-Fargo or Bank of America account. Because it is pegged to the dollar there's no chance of appreciation for investment purposes. Because it's linked to the dollar it supports rather than undermines the fiat system.
If someone can tell me what I'm missing I'll be glad to learn.
This conspiracy theory will never die. The issue is that the amount of tether printed is public knowledge, but the amount of dollars they hold can never be truly known, even with the most strict audits. The thing the conspiracy theorists miss is that every exchange on earth could be doing the same thing, but since they can't see how many dollars they claim to hold in customer balances, they can't be triggered into claiming it's fake pumping. Tether is simply a custodian, just like every exchange. Yes, they can all be lying about their solvency, just like every business on earth can be lying about its solvency. Find some evidence, and convince the market, if you think they are overvalued. Tether skeptics have failed to do that to a large degree, which is why tether free floats at just slightly below $1 on average (and less during liquidity squeezes), representing the risk the market is pricing in.
> which is why tether free floats at just slightly below $1 on average (and less during liquidity squeezes), representing the risk the market is pricing in.
The rest of your post is excellent but I'll pick you up on this. The price of USDT is not a reflection of risk, only of the efficiency of the traders who arb it.
USDC holds clients' funds in order to make some $ off investments. Not all of it is held in a bank account somewhere. But this factoid is buried in some document. It's more or less the same as what Tether does, and it's curious that suddenly there's been a) a huge tinfoil conspiracy about Tether and b) coincidentally numerous stablecoin competitors popping up.
All I could find on the study indicating any potential conflict of interest was:
"We thank the Berkeley Haas Blockchain Initiative for a research grant" -> "The Berkeley Haas Blockchain Initiative is a five year partnership with Ripple to advance academic research and student engagement"
So if you want, you could say Ripple must be in on it
thats pretty bs lol. they said it themselves that they use crypto for a part of the collateral to back usdt, its pretty obvious from any chart out there that btc goes up when tethers are created, and nobody other than tether knows whether or not they get collateral before they print, or if they use printed usdt and inject it into the market by buying up crypto and then use that as collateral. with all the crap that happened with crypto capital and bitfinex, its really hard to believe they dont print first and worry about collateral later, acting as their own bank, giving themselves free loans.